Leveraging dual citizenship

[robocorp]

I'm looking for someone to poke holes and clarify the risks of this idea.

Let's assume this context:

• I have dual citizenship: one EU, and one non-EU for which I'm declared non-resident (no yearly tax declaration to make, nothing to pay).
• My income is sourced via an offshore entity, and parked in an offshore account.
• I live in an EU country and use a local bank account to receive monthly withdrawals from offshore. This account is used to pay for my day-to-day expenses, all other investments are done offshore.
• I pay my taxes based on the amount of money that lands in the EU bank account every year.
• I enjoy my privacy and am not happy with my bank reporting my financial affairs to the local government, or how my tax money is spent.
• Therefore I'm looking to reduce the amount of money entering the EU account without reducing my cost of living.

The idea:

• Use my second citizenship to remotely open a bank account (most likely EMI) in the other country I'm a citizen of
• I would need to provide proof of residence to do so, which I officially don't have, but that can be solved (faked?)
• Split my monthly withdrawal between EU and non-EU accounts
• Use the non-EU funds locally via debit card
• Therefore reducing my reported and taxable income

What's unclear to me is the impact of opening a bank account in the country I'm non-resident of. As far as I understand, from the perception of that country's tax authority, having a bank account doesn't strip away my non-resident status, and therefore doesn't make me taxable. Since the citizenship and declared residence would be different than my EU one, there's also less chance of reporting to my local authorities.

What are the risks? Are there other ways to leverage two passports in this case?

 

[Sols]

Yes, you can commit tax evasion this way.

It will work until it doesn't.

If you don't like the taxes of your EU country, don't live in your EU country. No one is forcing you to stay.

If you get caught somehow — for example, if the tax authority starts digging into this offshore company that's paying you money — you're in for the ride of your life. Unless your offshore company is paying local tax, that is.

If you haven't told your banks about your EU passport, you are likely in violation of the T&Cs you signed with the bank. That can lead to account closure, with or without funds being frozen pending law enforcement investigation/court order. In most cases, it's just a slap on the wrist, and account details are updated. But if the bank suspects you have been using them to evade taxes, they have grounds to hold the money for quite a long time.

The best way to leverage two passports to lower your taxes (legally), is to pick whichever one is the most powerful, and book a flight to a place with tax laws that are more aligned with your personal preferences. No one is forcing you to live in the EU. Why would you live in a country and every day risk the torturous hellfire that awaits you if the tax man catches you? Why not live a peaceful, happy life where you don't have to use outmoded techniques to evade taxes?

Tax evasion is silly. Not worth it, IMO.

 

[JohnLocke]

I would be very careful about providing incorrect information to financial services such as banks and payment processors. You run the risk of them closing and freezing your money.

 

[saintjohnny]

I'm looking for someone to poke holes and clarify the risks of this idea.

Let's assume this context:

• I have dual citizenship: one EU, and one non-EU for which I'm declared non-resident (no yearly tax declaration to make, nothing to pay).
• My income is sourced via an offshore entity, and parked in an offshore account.
• I live in an EU country and use a local bank account to receive monthly withdrawals from offshore. This account is used to pay for my day-to-day expenses, all other investments are done offshore.
• I pay my taxes based on the amount of money that lands in the EU bank account every year.
• I enjoy my privacy and am not happy with my bank reporting my financial affairs to the local government, or how my tax money is spent.
• Therefore I'm looking to reduce the amount of money entering the EU account without reducing my cost of living.

The idea:

• Use my second citizenship to remotely open a bank account (most likely EMI) in the other country I'm a citizen of
• I would need to provide proof of residence to do so, which I officially don't have, but that can be solved (faked?)
• Split my monthly withdrawal between EU and non-EU accounts
• Use the non-EU funds locally via debit card
• Therefore reducing my reported and taxable income

What's unclear to me is the impact of opening a bank account in the country I'm non-resident of. As far as I understand, from the perception of that country's tax authority, having a bank account doesn't strip away my non-resident status, and therefore doesn't make me taxable. Since the citizenship and declared residence would be different than my EU one, there's also less chance of reporting to my local authorities.

What are the risks? Are there other ways to leverage two passports in this case?

Just FYI there's NOTHING legal about this setup, as nicely worded as it is.

This is blatant tax evasion. If I were you, I'd simply move out of EU if you don't want to pay EU tax.

You'd be risking way too much with the above.

 

[robocorp]

Noted. I was more concerned about losing the non-resident status, and therefore having to pay taxes in the non-EU country, but didn't realise this is that blatantly wrong.

I'm still interested to hear ways to stay lean in my current residency, and leveraging dual citizenship somehow. Moving out of the EU is simply not an option for personal reasons, unfortunately.

 

[Sols]

I'm still interested to hear ways to stay lean in my current residency, and leveraging dual citizenship somehow. Moving out of the EU is simply not an option for personal reasons, unfortunately.

You can do a lot of illegal things. Every single one of which you'll regret if the tax man catches you.

Citizenships are by and large irrelevant for tax purposes. Residence is what matters.

 

[saintjohnny]

Noted. I was more concerned about losing the non-resident status, and therefore having to pay taxes in the non-EU country, but didn't realise this is that blatantly wrong.

I'm still interested to hear ways to stay lean in my current residency, and leveraging dual citizenship somehow. Moving out of the EU is simply not an option for personal reasons, unfortunately.

I really don't know what you're referring to with "non-resident status". You're a "resident" where you live, and you pay tax where you live, it is really that simple.

How to leverage dual citizenship? Move to the country of citizenship with the most favorable tax regime.

Tax planning is extremely simple for one-man shows. Just go where you're treated best.

 

[robocorp]

I really don't know what you're referring to with "non-resident status"

Some countries (eg. Canada) offer you a non-resident status when your ties to the country are somewhat limited, even though you might still partly benefit/use some of its local services. It's an official way of recognizing you will not be taxed by this country.

You're a "resident" where you live, and you pay tax where you live, it is really that simple.

That's incorrect. In my case, losing my non-resident status means I'd be paying taxes in both countries, hence why I'm particularly careful about not losing this status.

 

[12345]

So can I get Caribbean citizenship and open a bank account with it
CRS will be reported to the caribbean country where there is often no income tax at all
Home country will not be able to find out.
I assume it's tax evasion ? How risky is it though, sounds like a good plan especially if someones home country is a poorly organized country.

Although as mentioned above moving to a different place is the best solution. However sometimes somebody is unable to move out because of family and other reasons, i'd rather hang myself than pay 50-60% tax to gov parasites honestly so sometimes somebody might need to resort to that

 

[Sols]

So can I get Caribbean citizenship and open a bank account with it
CRS will be reported to the caribbean country where there is often no income tax at all
Home country will not be able to find out.
I assume it's tax evasion ?

Yes, that's tax evasion. It's also probably fraud since you would've had to have told the bank that you live some place you don't. CRS is based on residence primarily, citizenship only secondarily.

 

[12345]

Okay, thanks, I see, it seems risky indeed and like a bad idea. I did not know that CRS is based on residency, So you would need to get an address in the Caribbean country and basically lie to the bank that you reside there. So getting a rent or owning a property in the caribbean would be an additional cost.
On top of that I doubt any reputable bank would onboard someone with St Kitts or Dominicana citizenship unless you bring very high amounts
You would be forced to bank with entities similar to Euro Pacific Bank